CHAPTER 4. Savings Mobilization

Savings mobilization was often referred to as the forgotten half of rural finance. In designing MABS, USAID emphasized savings mobilization more than previous donor-funded microfinance efforts had. MABS encouraged banks to appreciate the role and importance of savings and helped them focus on savings mobilization. The project encouraged banks to use their capacity to motivate borrowers to save through financial education and savings advocacies. This also allowed rural banks to generate small low-cost deposits to raise sustainable funding for lending activities and reduce external borrowings.

Expanded Savings Mobilization

MABS taught banks a range of strategies to reduce costs of maintaining small-value savings accounts, as well as methods to encourage clients to increase their deposit balances. The banks also focused on helping clients better manage financial assets and develop financially responsible habits. This effort was complemented by pilot activities in financial education using mobile phone technology together with a grant provided by sub-grant from Microfinance Opportunities under branchless banking grant provided by the MasterCard Foundation.

MABS-4 worked with banks to promote savings services in innovative ways to encourage clients to save more. At Cantilan Bank in April 2012, recipients of the government’s conditional cash transfer program were encouraged to open savings accounts.

Mobilizing deposit products provided rural banks with an attractive, stable source of funds for expanding their microfinance operations. Less reliance on external sources such as government or international donors helped banks focus on financial intermediation and become more self-sufficient. Banks also realized that providing microdeposit services[11]  was as important, if not more so, than providing microcredit.

The main challenge was to help banks reduce the cost of managing microdeposit accounts. Some banks introduced new products and incentives to encourage clients to save while reducing transaction costs. Apart from encouraging the use of ganansya boxes[12], the project encouraged banks to implement raffle schemes to persuade clients to open accounts and save more.[13]


[11] Microdeposits are defined in the Philippines as deposit accounts with balances below 15,000 PHP ($375).

[12] Ganansya boxes are similar to piggy banks, but with a lock. The bank keeps keys to open the boxes. Depositors take home the box and are encouraged to save their extra change. When the boxes are full, depositors return them to the bank, where the savings are transferred to a passbook account. Microdepositors, including children, learn the value of saving this way, while the bank increases its deposits and develops clients for a lifetime.

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